Stock Management In The Hotel Industry

Project and Seminar Material for Business Administration and Management BAM

Stock Management In The Hotel Industry


This research work tagged is intended to introduce the readers to the effective means of avoiding waste in their establishment and in order to avoid running under stock.An objective looks at stock management in the hotel, the activities involved in controlling stock, and roles of the stock keeper at both hotel and other firms.However, this work is organize into five (5) chapters. Chapter one (1) which is the introduction focuses on the background of the study, objectives of the study ,research questions significance of the study, scope and limitation of the study and operational definition of the concept and terms used in the study. Chapter two (2) centers on the reviews of the related literature relevant to the field of study among areas of related literature reviews include the concept and the need for Stock Management, Approaches to Stock Management, Cost of handling and storing stock, stock levels, Factors affecting the application of materials Management, Benefits of materials management concept. Chapter three (3) deals with the methods of research used in carrying out the research works. Whereas chapter four (4) centers on the presentation and analysis of data that validate the research findings.

Chapter One


1.1 Background of the Study

The most significance and most valuable assets of any existing enterprise are inventory management because for an enterprise to be able to give accurate measurement and good description of her asset, inventory becomes the first to mention. This is of course, is so because the sale of inventory at a price is greater than total cost indicates an efficient merchandising, which is however is the primary source income generation.

These inventories are both assets and items held in the ordinary course of business or goods that will be consumed or used in the production of goods to be sold.

Geoffrey Merdith[1982] defined stock management as inventory operations as the combination of systems and processes involved with inventory management as well as the physical aspects of storage and material handling. The direction and control of activities with the purpose of getting the risk inventory in the right place, at the right cost. Effective stock management and security are imperative and must cover the whole supply chain through to the final distribution to customers .

From the clear point of view, inventories in management constitute and important asset. However , stock management is an area of accounting and financial data of goods being sold. The stock management is an area of accounting and financial data of goods being sold. The stock management system should ensure that initial low quantity of goods can be put best use.

Graham Buxton[1979] looked at stock management as the ability of a firm to ensure that stocks of a company’s products are made available on a consistent basis in the light of the company’s service policy to its market demand. Stock management is extremely important. The investment of inventories, the largest current assets in manufacturing and retail establishments and may also be a material portion of the company’s total assets.

Nuolom[2000] says that the maintenance of stocks allows the production and marketing function to operate in an autonomous and economic manner. It means that quantity produced and the timing of the production are determined in the main by immediate production consideration.

Inventory for production are held for the following reasons:

  1. To maintain lot-size inventory.
  2. To avoid possible loss of sales or production time through variable in delivery time. This is achieved by maintaining a safety stock.
  3. To avoid disruption in production.

Richard R [2000] According to him, stock are in effect, reservoir of goods held in anticipation of marketing sales, the of filling demands from further down along the incoming channel. Incoming quantities of the product ready for sale arrive usually at irregular intervals and are added to the inventory reservoir. The outgoing product flow is more continuous but still fluctuates considerably. The volume in the inventory reservoir pulsates but not always with a regular rhyme from day to day. Changes occur in the rate and quantities of input and output. Therefore in deciding on inventory size, management must determine both maximum and minimum allowable inventory. In setting these upper and lower limits both sales and cost considerations are involved.

Sales considerations: The main purpose in maintaining inventory is to meet market demand, ie to make sales and to fill customers order. Since stock are kept in anticipation of market demand, the upper and lower control limits should be attained for forecasted sales. Thus, the more accurate, the sales forecast the greater opportunity to maximize gains from economically stock operations. The less the accurate, the forecast, the greater need for substantial buffer stock and some notion of its probable accuracy, a decision maker is prepared to set the control limits.

Another factor also must be taken into account it relates to what management considers an acceptable level of customer service. Experience shows that in a typical business, about eighty percent [80%] more inventory needed to fill ninety five percent [95%] of the customer’s order out of stock on hand than to just fill eighty percent[80%]. Each firm must strike a balance between what it considers reasonable customers service and costs in line with management goals. It should also recognize consistency of delivery at least as unimportant as speed of delivery.
Turner P.H [2001] says that unless an organization has an effective system of controlling the quantities of items in stock, it soon finds itself in difficulties.

On the other hand, nothing ruins goodwill and reputation more quickly than being unable to supply customers with the orders because of goods are out of stock. On the other hand, overstocking means pointlessly typing up capital and unnecessary cramping of goods that are valuable.

1.2 Statement of the Problem

The stock management problem consists of having insufficient supply of raw material, finished goods and parts components. The stock of items must be reasonable, meaning that it should not be too much or too little. The company should be in a position to meet customers’ demand in terms of quantity and quality. Stock management is of great importance especially for managers who must decide how to administer the rest of the logistics system more creatively in order to ensure that customer service does not suffer as a result of lower stock levels. That’s the reason why stock management requires a particular attention or the support of the entire company’s management levels in order to meet customers’ satisfaction (Brudan, 2010).

Any organization that operates without a proper stock management policy would always be faced with challenges of not having the items readily available when most needed. Some organisations do not even believe in the stock management as they see it as a waste of resources in that liquid cash that could be used for other aspects of working capital is being tied down as inventory. Suchorganisations would always have this believe that they could always get these items when needed which is not always so.

From the above reasons, it became imperative for the researcher to bring to light how Pinnacle hotel, Sokotogo about their stock management in other to get efficient service to their clients and customers.

1.3 Objectives of the Study

The specific objectives of this study is stock management in the hotel industry, the researcher intend to outline the following sub-objectives;

  1. To assess how the stock management activities is being done in Pinnacle hotel, Sokotoand how to improve it.
  2. To determine the role of stock management on performance of hotel industries in Nigeria.
  3. To examine the problems and challenges associated with stock management in hotel industries in Nigeria.
  4. To proffer possible solutions to the above problems associated with stock management in hotel industries in Nigeria.

1.4 Research Hypotheses

  1. H0: stock management does not play any significant role in customer’s satisfaction in Pinnacle Hotel, Sokoto.
    H1: stock management does play a significant role in customer’s satisfaction in Pinnacle Hotel, Sokoto.
  2. H0: none availability of stocks when needed doesn’t slow down the speed of business in pinnacle hotel, sokoto.
    H2: none availability of stocks when needed does slow down the speed of business in pinnacle hotel, Sokoto.

1.5 Significant of the Study

At the completion of this study the findings will be beneficial to the general public and Pinnacle Hotel management. Stock control or management is not only relevant in the hotel industry but in all organizations. It is hoped that this research work will also be relevance in the field of management both in the private and public organizations. The findings of the study will propose some strategies that Nigeria’s hotel industry can use to overcome these barriers and to implement stock management effectively.Finally the findings of this study will serve as a reference material to scholars who intend to embark on a topic of this nature.

1.6 Scope and Limitations of the Study

The researcher limited this study to the available literature on stock management in relation to what is being practiced in a service oriented outfit like Pinnacle hotels Ltd, Sokoto. The researcher was also limited to the available data gathered and as such the researcher could not verify the corrective or otherwise of the information given on the case study as a request to go through past records in relation to stock management in the organization was turned down. In the cause of the study, the researcher encounters some limitations which limited the scope of the study;

Time Constraint:

The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

Inadequate Materials:

Scarcity of material is also another hindrance. The researcher finds it difficult to long hands in several required material which could contribute immensely to the success of this research work.

Financial Constraint:

Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

1.7 Definition of Terms

Stock Management:

Stock management is the function of understanding the stock mix of a company and the different demands on that stock. The demands are influenced by both external and internal factors and are balanced by the creation of purchase order requests to keep supplies at a reasonable or prescribed level.

Stock Taking:

Stock-taking or “inventory checking” is the physical verification of the quantities and condition of items held in an inventory or warehouse. This may be done to provide an audit of existing stock. It is also the source of stock discrepancy information.


This the actual quality of goods or materials held in the store.

Stock Records:

A record kept of the amount, type, etc., of raw materials and supplies on hand, as in a manufacturing plant.

Store Requisition:

Forms used to keep track of materials charged to a particular job or department. The form contains such items as job number, department, and description of the material, quantity, unit cost, and dollar amount.

Inventory Catalogue:

It is a store document describing each Individual item of stock and the part it will form in the products.


This a method used in the identification of items by ways of letters or figures as both.


It is the document showing correctness of supply, receipt and issue.


He is a person who makes goods or items available to others.

ABC Analysis:

It is a stock control device that analysis the naira value of all items in the stock.

Minimum Stock Buffer:

A precautionary stock level which takes care of unexpected delays in delivery.

1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study.
  • Chapter two highlight the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study.

Chapter Five

Summary Conclusion and Recommendation

5.1 Introduction

It is pertinent to note that this research was aimed at cross examining the contributions of stock management in hotel business, thus the topic “stock management in the hotel industry”.

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges associated with stock management issues and customer’s satisfaction in hotel business in Nigeria.

5.2 Summary

This study which deals on the topic “stock management in the hotel industry’ reveals the following findings.

The analysis of data collected and the answers to the personal interview left the research with the following summary.

The Impact of stock management to small scale industries.

The Management gives adequate attention to the issue of stock management in the hotel, moreso, the number of times the store keeper use to check stock is two times in a month.

It was founded that stock checking is necessary in stock management as provided by the majority response.

It was also discovered that the management of inventories in the hotel is not a waste of time, resources and energy.

The hotel adopt three methods in the issuance of materials from the store first in first out, last in first out and weighted average.

It was also agreed that the storekeeper is in charge of receiving copies of requisition in the establishment.

It was found that there is a relationship existence between the purchasing, production, stores and stock control department.

Moreso, the company operates on pre-determining for items of stock whether minimum, maximum, re-order level and economic order quantity.

And found out that the stock keeper always ensure proper checking or stock taking in the stores.

The study founded that the need for holding stock includes transaction, precautionary motive and speculative motive.

5.3 Conclusion

Based on the findings and the summary above, it is now very important obvious that stock management is necessary and important to every company in order to avoid running out of stock and helps to maximize cost and profit. Every company or firm needs to work towards that in order to improve the company’s potential and growth.

In the same vein, records shows that young school leavers, graduates and business men both urban and rural areas are now showing interest towards effective means of safeguarding their stock.

In Nigerian Economy, stock management is extremely important. Therefore, the investment of stock is very necessary for the economic survival of profit oriented organization like Royal Palace Hotel, other Manufacturing Company inclusive. So the establishment should on the management and improve on the old fashion used and replace with news ideas and technology.

The study establishment that stock management would help to bridge the gap between shortages, and overstocking of materials items.

5.4 Recommendations

Stock management constitute an important worth of asset to any productive Organization. However, there are factors affecting the application of stock management in the organization. For effective and efficient management, the researcher makes use those recommendation.

  1. There should be adequate supervision given to all concerned with stock.
  2. They should always ensure that proper stock checking and stock taking is carried out on daily basis.
  3. The purchasing department and the store department should give a round of material acquisition and issuance should be carried out by both department.
  4. The management of Royal Palace Hotel should improve on the three techniques used in the issuance of materials from the store.
  5. The use of management information system will of a great extent help the Management of the hotel to improve on stock management.

It will also hope that there recommendation if adhered to will help other organizations who make use of stock improve on the management of stock.

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